The Dawes Plan, adopted in August 1924, fitted perfectly into the plans of
the German General Staffs military economists. (Testimony
before United States Senate, Committee on Military Affairs, 1946.)

The post-World War II Kilgore Committee of the United States Senate heard
detailed evidence from government officials to the effect that,

...when the Nazis came to
power in 1933, they found that long strides had been made since 1918 in
preparing Germany for war from an economic and industrial point of view.1

This build-up for European war
both before and after 1933 was in great part due to Wall Street financial
assistance in the 1920s to create the German cartel system, and to technical
assistance from well-known American firms which will be identified later, to
build the German Wehrmacht. Whereas this financial and technical assistance is
referred to as "accidental" or due to the
"short-sightedness" of American businessmen, the evidence presented
below strongly suggests some degree of premeditation on the part of these
American financiers. Similar and unacceptable pleas of "accident"
were made on behalf of American financiers and industrialists in the parallel
example of building the military power of the Soviet Union from 1917 onwards.
Yet these American capitalists were willing to finance and subsidize the
Soviet Union while the Vietnam war was underway, knowing that the Soviets were
supplying the other side.

The contribution made by
American capitalism to German war preparations before 1940 can only be
described as phenomenal. It was certainly crucial to German military
capabilities. For instance, in 1934 Germany produced domestically only 300,000
tons of natural petroleum products and less than 800,000 tons of synthetic
gasoline; the balance was imported. Yet, ten years later in World War II,
after transfer of the Standard Oil of New Jersey hydrogenation patents and
technology to I. G. Farben (used to produce synthetic gasoline from coal),
Germany produced about 6 1/2 million tons of oil  of which 85 percent (5
1/2 million tons) was synthetic oil using the Standard Oil hydrogenation
process. Moreover, the control of synthetic oil output in Germany was held by
the I. G. Farben subsidiary, Braunkohle-Benzin A. G., and this Farben cartel
itself was created in 1926 with Wall Street financial assistance.

On the other hand, the general
impression left with the reader by modern historians is that this American
technical assistance was accidental and that American industrialists were
innocent of wrongdoing. For example, the Kilgore Committee stated:

The United States accidentally played an
important role in the technical arming of Germany. Although the German
military planners had ordered and persuaded manufacturing corporations to
install modern equipment for mass production, neither the military
economists nor the corporations seem to have realized to the full extent
what that meant. Their eyes were opened when two of the chief American
automobile companies built plants in Germany in order to sell in the
European market, without the handicap of ocean freight charges and high
German tariffs. Germans were brought to Detroit to learn the techniques of
specialized production of components, and of straight-line assembly. What
they saw caused further reorganization and refitting of other key German war
plants. The techniques learned in Detroit were eventually used to construct
the dive-bombing Stukas .... At a later period I. G. Farben representatives
in this country enabled a stream of German engineers to visit not only plane
plants but others of military importance, in which they learned a great deal
that was eventually used against the United States.

Following these observations,
which emphasize the "accidental" nature of the assistance, it has
been concluded by such academic writers as Gabriel Kolko, who is not usually a
supporter of big business, that:

It is almost superfluous
to point out that the motives of the American firms bound to contracts
with German concerns Were not pro. Nazi, whatever else they may have been.

Yet, Kolko to the contrary,
analyses of the contemporary American business press confirm that business
journals and newspapers were fully aware of the Nazi threat and its nature,
while warning their business readers of German war preparations. And even
Kolko admits that:

The business press [in the
United States] was aware, from 1935 on, that German prosperity was based on
war preparations. More important, it was conscious of the fact that German
industry was under the control of the Nazis and was being directed to serve
Germany's rearmament, and the firm mentioned most frequently in this context
was the giant chemical empire, I. G. Farben.4

Further, the evidence
presented below suggests that not only was an influential sector of American
business aware of the nature of Naziism, but for its own purposes aided
Naziism wherever possible (and profitable) with full knowledge that the
probable outcome would be war involving Europe and the United States. As
we shall see, the pleas of innocence do not accord with the facts.

The Treaty of Versailles after
World War I imposed a heavy reparations burden on defeated Germany. This
financial burden  a real cause of the German discontent that led to
acceptance of Hitlerism  was utilized by the international bankers for
their own benefit. The opportunity to float profitable loans for German
cartels in the United States was presented by the Dawes Plan and later the
Young Plan. Both plans were engineered by these central bankers, who manned
the committees for their own pecuniary advantages, and although technically
the committees were not appointed by the U.S. Government, the plans were in
fact approved and sponsored by the Government.

Post-war haggling by
financiers and politicians fixed German reparations at an annual fee of 132
billion gold marks. This was about one quarter of Germany's total 1921
exports. When Germany was unable to make these crushing payments, France and
Belgium occupied the Ruhr to takeby force what could not be obtained
voluntarily. In 1924 the Allies appointed a committee of bankers (headed by
American banker Charles G. Dawes) to develop a program of reparations
payments. The resulting Dawes Plan was, according to Georgetown University
Professor of International Relations Carroll
Quigley, "largely a J.P. Morgan production."5 The Dawes Plan
arranged a series of foreign loans totaling $800 million with their proceeds
flowing to Germany. These loans are important for our story because the
proceeds, raised for the greater part in the United States from dollar
investors, were utilized in the mid-1920s to create and consolidate the
gigantic chemical and steel combinations of I. G. Farben and Vereinigte
Stahlwerke, respectively. These cartels not only helped Hitler to power in
1933; they also produced the bulk of key German war materials used in World
War II.

Between 1924 and 1931, under
the Dawes Plan and the Young Plan, Germany paid out to the Allies about 86
billion marks in reparations. At the same time Germany borrowed abroad, mainly
in the U.S., about 138 billion marks  thus making a net German payment of
only three billion marks for reparations. Consequently, the burden of German
monetary reparations to the Allies was actually carried by foreign subscribers
to German bonds issued by Wall Street financial houses  at significant
profits for themselves, of course. And, let it be noted, these firms were
owned by the same financiers who periodically took off their banker hats and
donned new ones to become "statesmen." As "statesmen" they
formulated the Dawes and Young Plans to "solve" the
"problem" of reparations. As bankers, they floated the loans. As
Carroll Quigley points out,

It is worthy of note that
this system was set up by the inter. national bankers and that the
subsequent lending of other people's money to Germany was very profitable to
these bankers.6

Who were the New York international bankers
who formed these reparations commissions?

The 1924 Dawes Plan experts
from the United States were banker Charles Dawes and Morgan representative
Owen Young, who was president of the General Electric Company. Dawes was
chairman of the Allied Committee of Experts in 1924. In 1929 Owen Young became
chairman of the Committee of Experts, supported by J.P. Morgan himself, with
alternates T. W. Lamont, a Morgan partner, and T. N. Perkins, a banker with
Morgan associations. In other words, the U.S. delegations were purely and
simply, as Quigley has pointed out, J. P. Morgan delegations using the
authority and seal of the United States to promote financial plans for their
own pecuniary advantage. As a result, as Quigley puts it, the
"international bankers sat in heaven, under a rain of fees and
commissions."7

The German members of the
Committee of Experts were equally interesting. In 1924 Hjalmar Schacht was
president of the Reichsbank and had taken a prominent role in organization
work for the Dawes Plan; so did German banker Carl Melchior. One of the 1928
German delegates was A. Voegler of the German steel cartel Stahlwerke
Vereinigte. In brief, the two significant countries involved  the United
States and Germany were represented by the Morgan bankers on one side and
Schacht and Voegler on the other, both of whom were key characters in the rise
of Hitler's Germany and subsequent German rearmament.

Finally, the members and
advisors of the Dawes and Young Commissions were not only associated with New
York financial houses but, as we shall later see, were directors of firms
within the German cartels which aided Hitler to power.

According to Hitler's
financial genie, Hjalmar Horace Greeley Schacht, and Nazi industrialist Fritz
Thyssen, it was the 1928 Young Plan (the successor to the Dawes Plan),
formulated by Morgan agent Owen D. Young, that brought Hitler to power in
1933.

Fritz Thyssen claims that,

I turned to the National
Socialist Party only after I became convinced that the fight against the
Young Plan was unavoidable if complete collapse of Germany was to be
prevented.8

The difference between the
Young Plan and the Dawes Plan was that, while the Young Plan required payments
in goods produced in Germany financed by foreign loans, the Young Plan
required monetary payments and "In my judgment [wrote Thyssen] the
financial debt thus created was bound to disrupt the entire economy of the
Reich."

The Young Plan was assertedly
a device to occupy Germany with American capital and pledge German real assets
for a gigantic mortgage held in the United States. It is noteworthy that
German firms with U.S. affiliations evaded the Plan by the device of temporary
foreign ownership. For instance, A.E.G. (German General Electric), affiliated
with General Electric in the U.S., was sold to a Franco-Belgian holding
company and evaded the conditions of the Young Plan. It should be noted in
passing that Owen Young was the major financial backer for Franklin D.
Roosevelt in the United European venture when FDR, as a budding Wall Street
financier, endeavoured to take advantage of Germany's 1925 hyperinflation. The
United European venture was a vehicle to speculate and to profit upon the
imposition of the Dawes Plan, and is clear evidence of private financiers
(including Franklin D. Roosevelt) using the power of the state to advance
their own interests by manipulating foreign policy.

Schacht's parallel charge that
Owen Young was responsible for the rise of Hitler, while obviously
self-serving, is recorded in a U.S. Government Intelligence report relating
the interrogation of Dr. Fritz Thyssen in September, 1945:

The acceptance of the Young
Plan and its financial principles increased unemployment more and more,
until about one million were unemployed. People were desperate. Hitler said
he would do away with unemployment. The government in power at that time was
very bad, and the situation of the people was getting worse. That really was
the reason of the enormous success Hitler had in the election. When the last
election came, he got about 40%.9

However, it was Schacht, not
Owen Young, who conceived the idea which later became the Bank for
International Settlements. The actual details were worked out at a conference
presided over by Jackson Reynolds, "one of the leading New York
bankers," together with Melvin Traylor of the First National Bank of
Chicago, Sir Charles Addis, formerly of the Hong Kong and Shanghai Banking
Corporation, and various French and German bankers.10 The B.I.S. was essential
under the Young Plan as a means to afford a ready instrument for promoting
international financial relations. According to his own statements, Schacht
also gave Owen Young the idea that later became the post-World War II
International Bank for Reconstruction and Development:

"A bank of this kind
will demand financial co-operation be, tween vanquished and victors that
will lead to community of interests which in turn will give rise to mutual
confidence and understanding and thus promote and ensure peace."

I can still vividly recall
the setting in which this conversation took place. Owen Young was seated in
his armchair puffing away at his pipe, his legs outstretched, his keen eyes
fixed unswervingly on me. As is my habit when propounding such arguments I
was doing a quiet steady "quarter-deck" up and down the room. When
I had finished there was a brief pause. Then his whole face lighted up and
his resolve found utterance in the words:

"Dr. Schacht, you gave me a wonderful
idea and I am going to sell it to the world.11

This interplay of ideas and
cooperation between Hjalmar Sehacht in Germany and, through Owen Young, the
J.P. Morgan interests in New York, was only one facet of a vast and ambitious
system of cooperation and international alliance for world control. As
described by Carroll Quigley, this system was "... nothing less than to
create a world system of financial control, in private hands, able to dominate
the political system of each country and the economy of the world as a whole.12

This feudal system worked in
the 1920s, as it works today, through the medium of the private central
bankers in each country who control the national money supply of individual
economies. In the 1920s and 1930s, the New York Federal Reserve System, the
Bank of England, the Reichs-bank in Germany, and the Banque de France also
more or less influenced the political apparatus of their respective countries
indirectly through control of the money supply and creation of the monetary
environment. More direct influence was realized by supplying political funds
to, or withdrawing support from, politicians and political parties. In the
United States, for example, President Herbert Hoover blamed his 1932 defeat on
withdrawal of support by Wall Street and the switch of Wall Street finance and
influence to Franklin D. Roosevelt.

Politicians amenable to the
objectives of financial capitalism, and academies prolific with ideas for
world control useful to the international bankers, are kept in line with a
system of rewards and penalties. In the early 1930s the guiding vehicle for
this international system of financial and political control, called by
Quigley the "apex of the system," was the Bank for International
Settlements in Basle, Switzerland. The B.I.S. apex continued its work during
World War II as the medium through which the bankers  who apparently were
not at war with each other  continued a mutually beneficial exchange of
ideas, information, and planning for the post-war world. As one writer has
observed, war made no difference to the international bankers:

The fact that the Bank
possessed a truly international staff did, of course, present a highly
anomalous situation in time of war. An American President was transacting
the daily business of the Bank through a French General Manager, who had a
German Assistant General Manager, while the Secretary-General was an Italian
subject. Other nationals occupied other posts. These men were, of course, in
daily personal contact with each other. Except for Mr. McKittrick [see

infra]
theft were of course situated
permanently in Switzerland during this period and were not supposed to be
subject to orders of their government at any time. However, the directors of
the Bank remained, of course, in their respective countries and had no
direct contact with the personnel of the Bank. It is alleged, however, that
H. Schacht, president of the Reichsbank, kept a personal representative in
Basle during most of this time.13

It was such secret meetings, "...
meetings more secret than any ever held by Royal Ark Masons or by
any Rosicrucian Order..."14 between the central bankers at the
"apex" of control that so intrigued contemporary journalists,
although they only rarely and briefly penetrated behind the mask of secrecy.

A practical example of
international finance operating behind the scenes to build and manipulate
politico-economic systems is found in the German cartel system. The three
largest loans handled by the Wall Street international bankers for German
borrowers in the 1920s under the Dawes Plan were for the benefit of three
German cartels which a few years later aided Hitler and the Nazis to power.
American financiers were directly representedon the boards of
two of these three German cartels. This American assistance to German cartels
has been described by James Martin as follows: "These loans for
reconstruction became a vehicle for arrangements that did more to promote
World War II than to establish peace after World War I.15

The three dominant cartels,
the amounts borrowed and the Wall Street floating syndicate were as follows:

Looking at all the loans
issued, it appears that only a handful of New York financial houses handled
the German reparations financing. Three houses  Dillon, Read Co.; Harris,
Forbes & Co.; and National City Company  issued almost three-quarters
of the total face amount of the loans and reaped most of the profits:

Wall Street
Syndicate
Manager

Participation in German industrial
issues in U.S.
capital market

Profits on
German
loans*

Percent
of total

Dillon, Read & Co.

$241,325,000

$2.7 million

29.2

Harris, Forbes & Co.

186,500,000

1.4 million

22.6

National City Co.

173,000,000

5.0 million

20.9

Speyer & Co.

59,500,000

0.6 million

7.2

Lee, Higginson & Co.

53,000,000

n.a

6.4

Guaranty Co. of N.Y.

41,575,000

0.2 million

5.0

Kuhn, Loeb & Co.

37,500,000

0.2 million

4.5

Equitable Trust Co.

34,000,000

0.3 million

4.1

___________

___________

_________

TOTAL

$826,400,000

$10.4 million

99.9

Source: See
Appendix A
*Robert R. Kuczynski, Bankers
Profits from German Loans

(Washington, D.C.: Brookings Institution,
1932), p. 127.

After the mid-1920s the two
major German combines of I.G. Farben and Vereinigte Stahlwerke dominated the
chemical and steel cartel system created by these loans. Although these firms.
had a voting majority in the cartels for only two or three basic products,
they were able  through control of these basics  to enforce their will
throughout the cartel. I.G. Farben was the main producer of basic chemicals
used by other combines making chemicals, so its economic power position cannot
be measured only by its capacity to produce a few basic chemicals. Similarly,
Vereinigte Stahlwerke, with a pig-iron capacity greater than that of all other
German iron and steel producers combined, was able to exercise far more
influence in the semi-finished iron and steel products cartel than its
capacity for pig-iron production suggests. Even so the percentage output of
these cartels for all products was significant:

Vereinigte Stahlwerke
products

Percent of German
total
production in 1938

Pig iron

50.8

Pipes and tubes

45.5

Heavy plate

36.0

Explosives

35.0

Coal tar

33.3

Bar steel

37.1

I.G. Farben

Percent of German total
production in 1937

Synthetic methanol

100.0

Magnesium

100.0

Chemical nitrogen

70.0

Explosives

60.0

Synthetic gasoline
(high octane)

46.0 (1945)

Brown coal

20.0

Among the products that
brought I.G. Farben and Vereinigte Stahlwerke into mutual collaboration were
coal tar and chemical nitrogen, both of prime importance for the manufacture
of explosives. I. G. Farben had a cartel position that assured dominance in
the manufacture and sale of chemical nitrogen, but had only about one percent
of the cok-ing capacity of Germany. Hence an agreement was made under which
Farben explosives subsidiaries obtained their benzol, toluol, and other
primary coal-tar products on terms dictated by Vereinigte Stahlwerke, while
Vereinigte Stahlwerke's explosives subsidiary was dependent for its nitrates
on terms set by Farben. Under this system of mutual collaboration and
inter-dependence, the two cartels, I.G. Farben and Vereinigte Stahlwerke,
produced 95 percent of German .explosives in 1957-8 on the eve of World War
II. This production was from capacity
built by American loans and to some extent by American technology.

The I. G. Farben-Standard Oil
cooperation for production of synthetic oil from coal gave the I. G. Farben
cartel a monopoly of German gasoline production during World War II. Just
under one half of German high octane gasoline in 1945 was produced directly by
I. G. Farben and most of the balance by its affiliated companies.

In brief, in synthetic
gasoline and explosives (two of the very basic elements of modern warfare),
the control of German World War II output was in the hands of two German
combines created by Wall Street loans under the Dawes Plan.

Moreover, American assistance
to Nazi war efforts extended into other areas.17 The two largest tank
producers in Hitler's Germany were Opel, a wholly owned subsidiary of General
Motors (controlled by the J.P. Morgan firm), and the Ford A. G. subsidiary of
the Ford Motor Company of Detroit. The Nazis granted tax-exempt status to Opel
in 1936, to enable General Motors to expand its production facilities.
General Motors obligingly reinvested the resulting profits into German
industry. Henry Ford was decorated by the Nazis for his services to
Naziism. (See p. 93.) Alcoa and Dow Chemical worked closely with Nazi industry
with numerous transfers of their domestic U.S. technology. Bendix Aviation, in
which the J.P. Morgan-controlled General Motors firm had a major stock
interest, supplied Siemens & Halske A. G. in Germany with data on
automatic pilots and aircraft instruments. As late as 1940, in the
"unofficial war," Bendix Aviation supplied complete technical data
to Robert Bosch for aircraft and diesel engine starters and received royalty
payments in return.

In brief, American companies
associated with the Morgan-Rockefeller international investment bankers 
not, it should be noted, the vast bulk of independent American industrialists
 were intimately related to the growth of Nazi industry. It is important to
note as we develop our story that General Motors, Ford, General Electric,
DuPont and the handful of U.S. companies intimately involved with the
development of Nazi Germany were  except for the Ford Motor Company 
controlled by the Wall Street elite  the J.P. Morgan firm, the Rockefeller
Chase Bank and to a lesser extent the Warburg Manhattan bank.18 This book is
not an indictment of all American industry and finance. It is an
indictment of the "apex"  those firms controlled through the
handful of financial houses, the Federal Reserve Bank system, the Bank for
International Settlements, and their continuing international cooperative
arrangements and cartels which attempt to control the course of world politics
and economics.

Footnotes:

1United States
Congress. Senate. Hearings before a Subcommittee of the Committee on Military
Affairs. Elimination of German Resources for War. Report pursuant to S.
Res. 107 and 146, July 2, 1945, Part 7, (78th Congress and 79th Congress),
(Washington: Government Printing Office, 1945), hereafter cited as Elimination
of German Resources.

9U.S. Group Control
Council (Germany), Office of the Director of Intelligence, Intelligence Report
No. EF/ME/1, 4 September 1945. Also see Hjalmar Schacht, Confessions of
"the old Wizard", (Boston: Houghton Mifflin, 1956)

10Hjalmar
Schacht, op
cit., p. 18. Fritz Thyssen adds, "Even at the time Mr, Dillon, a New
York Banker of Jewish origin whom I much admire told me 'In your place I would
not sign the plan.'"